In this tutorial I am going to explain how to install and setup Windows Server 2008 Domain Controller and DNS server which can be used as centralized server to keep user information, OU, setting up group policies etc.
1) Go to Start >> Run and type “dcpromo” and press enter.
Server will now start checking if Active Directory Domain Services (AD DS) binaries are installed or not; if not, then it will install it.

2) Once the AD DS binaries are installed, you will get “Active Directory Domain Services Installation Wizard”.

Here you will find a option “Use Advance Mode installation” which will show you more options (basically for advance user). You can keep the checkbox unchecked and press Next.
3) Next Windows will show some basic information about Microsoft Windows 2008 Active Directory Services. Press Next to continue.

4) Choose Deployment Configuration: This windows will allow to add the server to an existing Forest Or to Create a new Domain forest.

Select Create a new domain in a new forest and press Next.
5) Name the Forest Root Domain: Enter the name of the domain (Fully Qualified domain name) which will act as root domain for the AD DS and press Next. (you can use something like osmicro.local if you dont want to use your real domain name)

6) Set Forest Function Level: We would suggest you to read the description of every OS before selecting the option.

7) Set Domain Function Level: We would suggest you to read the description of every OS before selecting the option.

8) Additional Domain Controller Option: On this window you can select DNS service here. Also as this server is First domain controller in a forest it must have Global Catalog due to which it doesn’t allow you to enable or disable this feature. I want to set this Domain Controller Server as a DNS Server as well, so I have kept the check box beside DNS server selected. Press Next to continue.

If any DNS warning Pop-Up’s Press Yes to continue.

9) Location for Database, Log Files and SYSVOL: In this window you can set the Path for database, log and SYSVOL files. If you don’t want to change it keep them default and Press Next.

By default First name of the domain is NETBIOS name. E.g. here I have used domain osmicro.local so that NETBIOS name will be OSMICRO. So, after reboot I have to login into the server I will use “OSMICRO\Administrator” as user and the password which I have used on Step 10.